GARY SHILLING: Recession Is Coming, And It's All Due To The Consumer

Gary Shilling has a new column up at
Bloomberg View, explaining why he still thinks a recession is
coming.

What's great about it is that, forecast aside, he has a very
clear-eyed assessment of the state of the economy, featuring all
the bullish data points and bearish data points.

The key to his argument is that consumers are getting by on
mediocre income growth, and that retrenchment is inevitable,
though he acknowledges we haven't seen it so far, and that even
high gasoline prices haven't been a problem.

Anyway, we summarize his key thoughts:

Consumer spending does remain strong. Growth of 0.8 percent
in February was the best number in 7 months.

Retail sales and consumer confidence have also been strong.

But the numbers can't last. Personal income growth was just
0.2 percent in February.

Thanks to college tuition and the car market, consumer debt
is growing again.

The housing market is still miserable.

State and local spending is still depressed.

There's still plenty of excess capacity, restraining business
investment.

It all comes down to the consumer: Due to weak wage growth a
retrenchment is inevitable, and that's what will cause the
recession.